An Australian court has ordered $26.5 million in penalties against Cornerstone Investments Aust Pty Ltd, trading as Empower Institute (in liquidation) (Empower), the highest total penalties ever imposed for breaches of the Australian Consumer Law (ACL).
The media release (20 September) from the Australian Competition and Consumer Commission (ACCC) says:
The Court also ordered Empower to repay more than $56 million to the Commonwealth for funding it had received to provide the courses.
Empower ceased trading and in April 2017 entered into voluntary liquidation.
The Court found that Empower had engaged in a system of unconscionable conduct when it enrolled consumers in VET FEE-HELP funded courses, by marketing courses to consumers in remote communities, Indigenous communities and low socio-economic areas, making false or misleading representations, using recruiters who were practically untrained and in some cases offering inducements such as free Google Chromebooks.
“Between June 2014 and December 2014, Empower enrolled more than 4,000 students, often using these appalling tactics,” ACCC Chair Rod Sims said.
“Empower misled many vulnerable and disadvantaged consumers who had poor English language literacy or numeracy skills, and others who could not even use a computer and did not have access to the internet.”
“It should have been clear that these consumers were not likely to complete Empower’s courses, but would still be saddled with significant lifetime student debt,” Mr Sims said.
The Court described Empower’s conduct as involving a “callous indifference” to consumer protection, including signing up consumers for courses which meant they took on large VET-FEE HELP debts, for Empower’s financial gain.
“We welcome the record-breaking Australian Consumer Law penalties of $26.5 million imposed by the Court, which reflect the seriousness of the conduct,” Mr Sims said.
“The magnitude of these penalties and the $56 million ordered to be repaid to the Commonwealth should serve as a serious warning to the vocational education sector, and all other Australian businesses, that engaging in unconscionable behaviour has very significant consequences.”
Based on the Court’s findings and using the new VET FEE-HELP Student Redress measures, the Commonwealth has decided to cancel the debts of over 6000 consumers enrolled in courses with Empower in 2014 and 2015.
“The ACCC welcomes the Commonwealth’s decision to cancel these student debts. It is important that victims are not saddled with a debt burden because they signed up to these courses as a result of Empower’s egregious conduct,” Mr Sims said.
Background
The ACCC and the Commonwealth Department of Education and Training commenced proceedings against Empower in December 2015 following a joint ACCC and NSW Fair Trading investigation.
Empower was a provider of VET FEE-HELP Diploma courses which cost up to $15,000 per course. It marketed and sold these courses using face-to-face marketing, including door-to-door sales. Courses marketed to consumers included Diploma of Management, Diploma of Business and Diploma of Early Childhood Education and Care.
Empower marketed and sold VET FEE-HELP funded courses to consumers in remote communities and low socio-economic areas, including Indigenous communities, in New South Wales, Western Australia, Victoria, Queensland and South Australia.
Empower ceased trading and in April 2017 entered into voluntary liquidation.
In September 2018, the Federal Court handed down judgment on liability, which found that Empower engaged in unconscionable conduct, misleading or deceptive conduct and breached the unsolicited consumer agreement provisions of the Australian Consumer Law.
ABC News Report
The ABC reports that Empower is just one of a number of actions the ACCC has taken against VET-FEE HELP providers. Other include:
- Productivity Partners Pty Ltd, trading as Captain Cook College
- Unique International College Pty Ltd
- Australian Institute of Professional Education Pty Ltd
- Phoenix Institute of Australia Pty Ltd and Community Training Initiatives Pty Ltd
- Careers Australia Group Limited
- Australian Vocational Learning Centre Pty Ltd
- Get Qualified Australia Pty Ltd
The ACCC also took action against Acquire Learning & Careers Pty Ltd, who marketed VET FEE-HELP courses.
Community Colleges Australia Comment
Community Colleges Australia (CCA) has tracked the long fall-out from the VET FEE-HELP scandal. Trouble-plagued VET FEE-HELP loans ended in 2016, replaced by the VET Student Loans program, which has avoided the earlier problems.
In 2018, the Sydney Morning Herald described VET FEE-HELP as, “the biggest public policy scandal in Australian history: the systematic rorting of the vocational education and training system.”
“Recent attacks on Australia’s national VET regulator have not been helpful. Weakening of Australian VET regulation would not be good for the VET sector and certainly not good for not-for-profit community education providers,” said Dr Don Perlgut, CEO of CCA.
“In part through VET FEE-HELP, Australia’s VET sector is carrying a legacy of poor credibility that no amount of ‘re-branding’ and public relations will change. People need to be convinced that VET providers bring quality and consistency. Without that, VET will remain a poor cousin to universities,” Dr Perlgut said.
In April 2018, Dr Perlgut said:
“VET FEE-HELP is a symptom of a deeper malaise in Australian public life, one that assumed that the privatisation of public educational (and other) services was a good thing, that somehow an efficient ‘market would provide’ when public funding was given out. What we know now – and should have recognised then – is that this simply is not true. Education is a public good. The marketisation of Australian public services has never been more problematic than in the VET space. Education should not be a buy-and-sell commodity.”
Even the Commonwealth’s economically dry Productivity Commission acknowledges that fact, writing in August 2017:
“The expansion of VET FEE-HELP access after 2012 is a well-documented example of how policy can fail if governments do not ensure proper policy design along with suitable regulatory oversight. This policy failure has caused considerable uncertainty and reputational damage to the sector as well as diverting government resources and focus to develop new policies to repair the damage.”
